Basic Income as a Field Study.

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Description of the project Basic Income as a Field Study


1 List of contents

1 List of contents........................................................................................................... 1
2 The authors ............................................................................................................... 1
3 Purpose of this document .......................................................................................... 1
4 Goals and objectives.................................................................................................. 1
5 The concept and principles ........................................................................................ 2
5.1 Currency denomination.............................................................................................. 2
5.2 Participants................................................................................................................ 2
5.2.1 Natural persons...................................................................................................... 2
5.2.2 Corporate entities / legal persons........................................................................... 2
5.3 The marketplace........................................................................................................ 3
5.4 Accounting................................................................................................................. 3
5.5 The BIG contribution.................................................................................................. 3
6 Frequently asked questions (FAO)............................................................................. 4
7 Index.......................................................................................................................... 6
8 Definition of terms...................................................................................................... 6
9 Attachment: control cycle........................................................................................... 7

2 The authors
Dirk Schumacher, Neuhofer Str. 53, 53945 Blankenheim
Email.: d.schumacher@owako.de
Homepage: www.bge-kreise.de

Written in February 2010
Most recent update: April 2013
In cooperation with:
Prof. em. Dr. Otto Ldemann, Hamburg
English translation:
Thomas Stuckenberg, Sebastian Herzog-Geddes and James Michael Griffin


3 Purpose of this document
Outline of the project: Basic Income in form of a field study, as well as a blueprint while
creating the application BGE-Network. BGE as an acronym depicts what is known in
Germany, Switzerland, and Austria as Bedingungsloses Grund-Einkommen, in the US
generally referred to as Basic Income Guarantee (BIG) or in the UK as Citizens Income or
sometimes also as Unconditional Basic Income (UBI).

4 Goals and objectives
The contents of this document and its applications have been created for people who wish to
live, experience, and apply basic income principles as part of their daily lives.
There has been talk for a long time, but now it is time to gain practical experience. This
practical application puts many of the currently discussed principles to the test.
In order to be able to establish a necessary close circuit economic system, certain needs
have to be met. Besides the introduction of technical and organisational guidelines plus a
surrogate currency, all participants need to agree to a concept of man based on solidarity
and a concept of society based on democratic principles:

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The concept of man based on solidarity is practically implemented by each participant
adding his/her resources and personal skills like anyone else to lay down a foundation and
guarantee to all in order to create value for all. Regardless of individual differences and in
accordance with BIG principles every participant is deemed equal and equally important. All
participants thus constitute the marginal return of the systems surrogate currency.

The concept of society based on democratic principles takes shape and form when
decisions regarding the establishment, management, and amendment of the system are
made by consensus. In cases of this not being applicable, majority rules.


5 The concept and principles

We are basically looking at an exchange trading system (Tauschring, barter, LETS, BIG
circle) expanded by the aspect of a basic income guarantee. This protected domain creates
a realm, in which people have access to economic business cycles, from which they can
draw direct insights and knowledge about how they work in action. For those of you who wish
to learn more about the theoretical aspects of economic cycles, please go to
http://en.wikipedia.org/wiki/Circular_flow_of_income
We recommend convening for regular meetings within a given BIG circle. This enables a
more immediate perception of economic processes and their resulting consequences on the
whole circle of participants. In addition, this enables the group to increasingly fine-tune the
existing steering instruments flexibly and constantly (i.e. determining or varying the BIG
contribution percentages as they apply to various posting types). More details will be given
on different aspects of the BIG circles within the remainder of the text.

5.1 Currency denomination
CU is an acronym for currency unit. This is a surrogate currency. It merely exists in a
virtual, paperless form, just like money on checking accounts. If ever even used, the term CU
will be the name of the currency. As applied here, the name of this currency is (if ever used)
CU. Thus goods and services are payable in CUs.

5.2 Participants
Every natural or legal person can participate.
A list of all participants can be produced and saved in PDF format.

5.2.1 Natural persons
All registered natural persons will receive a basic income. Children will be registered as
independent participants who are entitled to a basic income, as well. Each newly registered
natural person will increase the total stock of CUs within a respective BIG circle by 2,400
CUs. A new participant will receive 1,600 of these 2,400 CUs as his/her start-up balance,
and will receive a basic income of 400 CUs every month from then on. If a natural person
leaves the circle, 2,400 CUs are withdrawn from the pool of the respective BIG circle.
For a natural person starting to actively participate in the market, it may be useful to register
a second account as a corporate entity/legal person.
5.2.2 Corporate entities / legal persons
Corporations (i.e. companies, organisations, societies, as well as the BIG circle itself) may
participate in the BIG circle with equal rights. However, they will not receive a basic income.
Just like in the actual and existing tax system, a corporation can be exempted from paying

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value added taxes (VAT) within the BIG circle called BIG contribution -, because not
income and performance are being taxed, consumption is (compare to existing prepaid tax).
As a general rule corporations produce goods and deliver services they sell. Excess income
is paid out to shareholders as their income. Within the BIG concept, we refer to income as
Subsistence+.

5.3 The marketplace
The supplies and demands of all participants within their respective BIG circle, possibly also
other BIG circles, are being offered in the marketplace. By means of keyword search, supply
and demand, reflecting diverse and complex features, items and services can be arranged
and found accordingly. Here supplies and demands are listed with their respective pricing in
CUs.
All supplied and demanded items and services can be produced and displayed as PDF files
and stored locally on a participants personal computer.
5.4 Accounting
Besides the marketplace, the set of all transactions constitute another central element as
part of the application. All transactions relative to a participant are displayed in a highly
transparent manner and in CUs. It is in essence online accounting. All transactions, like
regular payments, but also donations, loans, instalments, wages, etc., are visible and
transparent to the participant only. This includes transactions of participants with external
BIG circles. For each booking that includes a BIG contribution, a second transaction slip is
created that reflects the current BIG contribution balance of a participant.
At the beginning of each month BIG payments to participants are disbursed. Whenever a
new participant enrols, the quadruple amount of the basic income is disbursed as his/her
opening balance, provided he/she is a natural person. This opening balance reflects that a
respective participant is recognized as an asset and equity, or collateral, with all of his/her
individual resources and skills as beneficial to the economic circle. Consequently, if a person
leaves the BIG circle, the start-up amount is returned to the BIG circle.
At the end of each month all accounts are being balanced.
Balance sheets and transaction slips can be generated and saved as PDF files.

5.5 The BIG contribution
All BIG contributions serve to finance the monthly unconditional disbursements (honouring
and appreciating the individual as well as the community). Theoretically, all existing
transactions as well as the safeguarding of the circulation in a BIG circle can be charged with
a BIG contribution. Each individual circle may the percentages of charges as they feel fit.
Hence, this application leaves space to play out differing BIG models: for instance models
operating with a "negative income tax", as well as models working with "pure consumption
tax" as a BIG instrument.


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6 Frequently asked questions (FAO)

What are CUs?
CUs constitute a purely virtual surrogate or regional currency (similar to the Lews Pound or
the Sewlets or accounting units in barter trade groups), combined with the idea of a Basic
Income Guarantee.

What is the value of a CU?
Each value is merely relative and can change according to participants' agreements in the
course of the project. For the sake of simplicity it is for the time being linked to the Euro
and/or to time (in other words: 1 CU = 1 = 1 minute).

What happens when there is little or no overall turnover?
In this case, the participants have failed to create benefits for themselves; they may have to
consider raising their BIG contributions in order to assure a continuous disbursement of CUs.

What happens, if due to a high monthly turnover there are no more CUs left for
the participants?
In this case, the participants may have to consider reducing the percentage of the BIG
Contribution.

Is it possible to lend CUs?
Yes, it is, but free of interest. CUs can be lent from one participant to another. Each BIG
circle decides whether or not a BIG contribution should be charged.

Can I donate CUs?
Yes, CUs can be donated to other participants. Each BIG circle decides whether or not a BIG
contribution should be charged.

Can I save CUs as a retirement provision?
Yes/No. This project is a field study in order to find out how economic and business cycles
work and as such it can only be an addition to the existing economic system. Therefore it is
only a limited substitute to the existing economic system. Because the idea of this project is
based on a basic income guarantee, saving for retirement is not a necessity based on the
principles of the project.

Can the stock of CUs (money supply M1) change?
No, this is not necessary. By means of the designated value given to a CU through the circle,
a sufficient steering instrument is in place.

What is the basis on which 2,400 CUs are assigned per participant or 400 CUs
as a monthly Basic income to a natural person?
This is a virtual assumption based on the following considerations:
Presently, the welfare state guarantees to provide payments at subsistence level to all.
However, what is missing is the possibility to partake culturally and socially. This gap can be
closed by means of participating in a BIG circle.
Furthermore, regarding the correlations of the money supplies, money supply M1 (cash plus
cheque money) is the basis. The amount of M1 is equivalent to six times the average net per
capita income in Germany (sources: EUROSTAT, DESTATIS and Wikipedia, figures of
2010). Thus the CU-money supply ratio to monthly contribution of CU basic income is 6:1.

What happens to the BIG contributions?

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The BIG Contributions go to the BIG circle. The BIG circle, a corporate entity participating,
guarantees the disbursement of the basic income to all natural persons participating.

What should be the total amount of CUs in a CU stock of a BIG circle?
Within the real economy pension funds in Germany have to keep mandatory sustainability
reserves. At the end of 2009, this reserve averaged almost one monthly disbursement per
person. It can vary between 20% and 150% of a monthly disbursement. (Source: Wikipedia:
Nachhaltigkeitsrcklage / sustainability contingency reserve) Based on this ratio, the stock of
CUs in a BIG circle should be between 0.2 and 1.5 of the total amounts monthly
disbursements. Naturally, it is up to each circle to determine their ratios as they see fit.

Can the amount of monthly CU disbursements vary?
No, this is not necessary. The application has a sufficient amount of steering safeguards in
place (i.e. flexibility in setting the percentages of the BIG contributions).

Are there exclusions to who can participate?
No, everyone is welcome.

Who pays for the technical equipment, development, maintenance and
administration of this application?
The project is funded by supporters of the BIG idea and paid in Euros. The annual costs
average double-digit Euro amounts. Other than that, each BIG circle is free to decide on
monthly Subsistence+ payments to their administrator (either from donations to the circle or
as a part of the Honourable or Dignity Contributions).

Is it possible for the participant "BIG circle" to slip into the red?
Yes, if the participant BIG circle lacks sufficient financial means to disburse the basic
income, the account of this BIG circle will turn negative. This would be similar to what is
known as public debt in real economies. Should this occur, it will be necessary to discuss
terms within a BIG circle on how to finance the monthly basic disbursements.

How does the internal revenue office respond to BIG circles?
For practical reasons, the internal revenue offices tolerate exchange trading groups, because
it is difficult to assess what may be income or not. Exchange trading groups are seen as part
of neighbourly support systems that are generally not taxed. Even sizeable exchange trading
groups with more than 250 participants are seen in this light. Nonetheless, BIG circles cannot
guarantee tax exemption to their individual participants.

Space for further questions and answers

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7 Index

Surrogate Currency 6
Consumption Tax 6
Corporations 6
CU 6
Honourable or Dignity Contribution 2, 6
Marketplace 6
Money Supply 4
Natural person 6
Negative income tax 6
Posting types 6
Prepaid tax 6
Subsistence value 6
BIG 6
BIG circle 6


8 Definition of terms

Subsistence+ Any amounts corporations pay to participants that are
equivalent to wages, salaries, and income in the real economy.
BIG Basic Income Guarantee, can also be regarded as a disbursed
income tax allowance in order to enable people to participate in
society.
BIG circle Circle of people who partake within the BIG field study project.
Posting types This designates the types of transaction given. Respective BIG
circles can autonomously determine, if BIG Contribution dues
are charged for what type of transactions, as well as their
percentages or amounts.
Surrogate Currency This is an alternative currency for the exchange of goods and
services within the BIG system.
Consumption Tax See BIG contributions
Corporations All participants within a BIG circle that are not natural persons,
in general market participants who are exempt from paying a
BIG contribution.
Marketplace The place where participants supplies are offered and
demands met, as well as goods and services exchanged within
a BIG circle similar to the real marketplace.
M1 Liquid money (printed notes / cash plus cheque money)
natural person Human beings participating in a BIG circle.
negative income tax Instead of granting an income tax allowance to be credited, the
negative income tax is disbursed.
Prepaid tax Within todays tax code VAT is charged on all goods and
services offered by companies/traders. VAT paid on purchases
made will be subtracted with VAT charged. The
margin/difference (added value) will be balanced out with the
internal revenue office.
BIG contribution Serves to finance the Basic Income Guarantee.
CU Currency Unit



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9 Attachment: control cycle



Parti-
cipant 1
CircleAccount
guarantees the
disbursement of
the basic income to
all natural persons
participating
Basic Income Guarantee


BIG contribution

BIG contribution
Parti-
cipant 3
Parti-
cipant 2
Basic Income Guarantee
Basic Income Guarantee
safeguarding of the circulation
transactionfee
*transaction e.q. payment, income, loan
transaction*
transaction*